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Journal Article

Does the Profile of Income Inequality Matter for Economic Growth?: Distinguishing between the Effects of Inequality in Different Parts of the Income Distribution

Sarah Voitchovsky
Journal of Economic Growth
Vol. 10, No. 3 (Sep., 2005), pp. 273-296
Published by: Springer
Stable URL: http://www.jstor.org/stable/40216078
Page Count: 24
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Does the Profile of Income Inequality Matter for Economic Growth?: Distinguishing between the Effects of Inequality in Different Parts of the Income Distribution
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Abstract

This paper investigates the importance of the shape of the income distribution as a determinant of economic growth in a panel of countries. Using comparable data on disposable income from the Luxembourg Income Study, results suggest that inequality at the top end of the distribution is positively associated with growth, while inequality lower down the distribution is negatively related to subsequent growth. These findings highlight potential limitations of an exploration of the impact of income distribution on growth using a single inequality statistic. Such specifications may capture an average effect of inequality on growth, and mask the underlying complexity of the relationship.

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